Chapter 3: Executive Compensation in the 21st Century: Future Directions

It has become difficult to maintain the widely held view of the 1990s that US pay practices provide explicit and implicit incentives for aligning the interests of managers with those of the shareholders. On contrary, it seems that the managers have got the possibility and the power to set their own wage at the expense of shareholders (Bebchuk et al., 2001). Long-standing debates all over the world show that the opinions are controversial.

Recently, Malcolm McIntosh (McIntosh, 2015), in his book “Thinking the 21st Century: Ideas for a New Political Economy,” supported capitalism but castigated the current institutions, structures, and interpretations of neoliberal capitalism. He proposed five system changes necessary for the emergence of a new political economy in the 21st century. One of the fundamental changes is about the transformation and reorganization of the current model of capitalism and its constituting institutions into more balanced and harmonious ones that take into account connectivity, accountability, transparency, networks, values, relationships, enablement, entrepreneurship, and rethinking the meaning of capital (economic, social, environmental, cultural, etc.). This change is based on one fundamental question: “how can we make enterprise a spur to ingenuity serving all humanity and not simply a conduit for individual greed?”. Visser (2011) suggested a transformative approach to corporate social responsibility (CSR) that goes beyond CSR as a managerial strategy (strategic CSR).¹